Biotech firm Athira Pharma hit by class action lawsuits following image manipulation claims

Leen Kawas, CEO of Athira Pharma, went on leave earlier this month. (Athira Pharma photo)

The lawsuits have started.

Less than a week after the CEO of Athira Pharma was given a temporary leave of absence on allegations of altered images in the scientific papers she wrote, three class action lawsuits were filed on behalf of the shareholders for alleged SEC violations.

All three lawsuits were filed on Friday alleging that the Bothell, Washington-based company made false and misleading statements in its filings to the Securities and Exchange Commission in preparation for its IPO last September, ultimately leading investors to ” invalid research “has led astray.”

The company, which is in clinical development of a drug for Alzheimer’s and Parkinson’s dementia, raised approximately $ 204 million at a stock price of $ 17.00 when it went public. Stock prices have fallen about 40% since CEO Leen Kawas’ leave of absence on June 17, trading at $ 10.37 on Tuesday.

On June 17, the news site STAT published an article examining the allegations of image manipulation in Kawas’ articles that first appeared on PubPeer, a service that allows scientists to comment on the integrity of data in scientific articles.

A comment first appeared on one paper in 2016 and more recently on three other studies. These are works that Kawas researched as a PhD student at Washington State University, where she completed her PhD in 2011.

According to one of the lawsuits, Athira’s SEC filing failed to indicate that Kawas “published research with improperly altered images as a PhD student” and that “as a result, Athira’s intellectual property and product development for the treatment of Alzheimer’s disease” was based on invalid research. “

Before: Athira Pharma CEO Leen Ka on leave, stocks drop more than 30%

The lawsuits claim that Kawas’ graduate research laid the foundation for Athira’s efforts to develop new treatments. A lawsuit finds that Kawas is identified in a key SEC document as “essential to the development of our innovative translational development strategy.”

The lawsuits seek damages from the defendants, who are identified in one lawsuit as Athira Pharma and Kawas. The other two also name Glenna Mileson, CFO of the company and the company’s directors, including Joseph Edelman, founder and CEO of Perceptive Advisors, who led a Series B round for the company, and Tadataka Yamada, chairman and partner of the venture Frazier Healthcare Partner. Yamada is also the former president of the Bill and Melinda Gates Foundation’s global health program.

Athira hadn’t commented on the lawsuits, according to a spokesman contacted by GeekWire.

In a press release on June 17, Yamada said, “Athira is committed to the integrity of scientific research in its mission.” He also said that the company’s primary active ingredient, ATH-1017, “was developed by Athira based on novel data obtained within the Company generated, discovered, developed and patented. The company is convinced of the therapeutic potential of ATH-1017 for the treatment of dementia. “

Last summer, Kawas told GeekWire that the potential of Athira’s technology was “huge”. She founded Athira – formerly known as M3 Biotechnology – together with WSU researchers Joseph Harding, her doctoral advisor, and Jay Wright, with WSU promising initial studies in a 2012 article.

According to Athira’s website, neither Harding nor Wright appear to be currently part of the company’s management, board of directors, or clinical and scientific advisory board. They weren’t associated with the company in the IPO registrations either.

The WSU is conducting its own investigation into this matter.

The lawsuits were filed by the Seattle law firms Tousley Brain Stephens, Rossi Vucinovich and Keller Rohrback. Two of the lawsuits also name the IPO underwriters as defendants: Goldman Sachs and Co., Stifel Nicolaus & Company, Jefferies, and JMP Securities.

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